Given the scale of the environment and climate crisis, the government and Bank of England must work together to initiate large-scale public investment for a fair, green transition. Simply relying on the private sector to deliver the billions needed and to redirect financial flows away from environmentally damaging activities will not meet the challenge we face.

We call on the government and Bank of England to work together to:

• Increase public investment in a fair, green transition by at least £30 billion a year.

• Use regulation to force banks to stop funding risky fossil fuels and to invest in green, job-creating projects instead.

More detail:

The government's Net Zero Strategy is flawed because it relies on private finance to deliver the green transition. But we know we can't rely on private investors, who only care about maximising profits, to deliver the huge investment we need for a fair green transition. Meanwhile the government's Net Zero Review is scaremongering about increased government borrowing and passing on costs to 'future taxpayers'. But economists have called for at least £30bn a year in public investment to meet the government's net zero target. [1] Public spending to build new infrastructure and create green jobs will not be a burden on future generations, but a sensible investment that will pay for itself and deliver huge dividends for the whole of society.

A second key issue that the government fails to address in its strategy is that banks in the City of London are responsible for causing environmental destruction all over the world. Five UK banks have poured £227,000,000,000 into fossil fuels since the Paris Agreement, more than four times the amount it would cost to power all UK homes with offshore wind by 2030. [2] The government and Bank of England set the rules for these banks and are allowing this to happen.

The government’s Net Zero Strategy hopes for £90billion in private investment by 2030, but this is just the same amount that has been invested in renewables in the previous nine years - in other words, business as usual. To reach net zero by 2050 the International Energy Agency - the authoritative source on the energy transition - has said all new fossil fuel development must stop this year, and that annual investment in clean energy needs to more than triple to around £3 trillion by 2030. [3] The UK government needs to ensure its 2022 Green Finance Strategy reflects this - by regulating private banks and finance and by unleashing the huge public investment that’s needed to transition the global economy to one that’s green and fair.

Notes:
[1] https://www.theguardian.com/politics/2021/oct/23/senior-tories-tell-chancellor-spend-dont-cut-to-level-up
https://www.ippr.org/news-and-media/press-releases/budget-investment-boost-of-33bn-a-year-needed-to-put-uk-on-path-to-net-zero-by-2050-chancellor-told
[2] https://www.ran.org/bankingonclimatechaos2021/
https://www.theguardian.com/environment/2020/oct/06/powering-all-uk-homes-via-offshore-wind-by-2030-would-cost-50bn
[3] https://www.iea.org/reports/net-zero-by-2050
https://www.theguardian.com/environment/2021/may/18/no-new-investment-in-fossil-fuels-demands-top-energy-economist